Tax cut, more money for schools part of final Indiana budget

2013 session ends with passage of $30 billion spending plan

By Tom Davies and Tom LoBianco
of The Associated Press

Saturday, April 27, 2013 - 8:22 am

INDIANAPOLIS — The Indiana General Assembly approved a two-year, $30 billion budget early Saturday that gives Gov. Mike Pence a partial victory in his quest for an income tax reduction and restores some money cut from education and transportation during the recession.

Lawmakers worked feverishly into the wee hours to hammer out agreements on the budget and other issues, including an expansion of the state's school voucher program and changes to sentencing laws that would require those convicted of the most serious crimes to spend more time in prison.

The biggest item on their to-do list was the two-year budget. The spending proposal, which the Senate approved around 1 a.m., included a modest increase in school funding, new money for roads and highways and roughly $350 million in new tax cuts.

"I think we have a budget we can be proud of," said Sen. Luke Kenley, R-Noblesville, the Senate's budget point man.

The budget marked a partial victory for Pence, who made a 10 percent cut in the personal income tax a signature piece of his gubernatorial campaign. He instead won a 5 percent income tax cut, which will be phased in starting in 2015, and lawmakers restored some of the school and transportation money cut under former Gov. Mitch Daniels during the recession.

House Democratic leader Scott Pelath, of Michigan City, said the biggest tax savings would go to the wealthy and businesses through a plan to eliminate the inheritance tax and continuing corporate tax cuts. He said the middle class would see little benefit.

"Maybe two years down the road an extra buck a week in their pocket. That is pathetic," Pelath said. "These tax cuts they talk about are a sham. The income tax cut only happens two years from now."

Democrats said Republicans were shortchanging education by increasing school funding 2 percent in the budget's first year and 1 percent in the second after big cuts were made during the recession. The budget adds about $200 million more than what Pence sought for schools. It also would pay off more than $80 million in loans taken by charter schools, possibly including schools whose charters were revoked by Ball State University earlier this year.

Sen. Karen Tallian, D-Portage, said the school funding increases were inadequate.

"This is a percentage increase only over a severely reduced rate and we are not back to where we were before the recession," Tallian said.

Lawmakers voted to expand the state's school voucher program, which is already the nation's broadest. The program would be opened to students whose siblings already receive vouchers and those who would otherwise enroll in "failing" schools or have special needs. More than 9,000 students currently receive the vouchers, which provide public money so they can attend private school.

Rep. Todd Huston, R-Fishers, said the expansion would give more parents options to select the school that is best for their children.

But Rep. Vernon Smith, D-Gary, said the voucher expansion would sap money from public schools.

"I think this is absurd and something we should not be doing," Smith said. "This is too costly a burden on public education."

Lawmakers also approved a proposal to halt implementation of national Common Core education standards while state budget officials and a legislative panel look at concerns the education rules might strip autonomy from the state.

They also were expected to approve a new school-grading model following controversy over one crafted by former School Superintendent Tony Bennett before he lost re-election last year. The new model would be drafted by the state Board of Education, minimizing Democratic School Superintendent Glenda Ritz's role.

A proposal that would make it illegal to secretly take videos or photographs that could make a business look bad, dubbed the "ag gag" bill by opponents, died Friday afternoon. The House sponsor withdrew the bill after a lengthy debate during which several opponents criticized it for exposing industrial whistleblowers or even unhappy restaurant customers to possible criminal charges.

Lawmakers also passed a new review by the Indiana Utility Regulatory Commission of the proposed Rockport plant, if the Indiana Supreme Court determines the state's 30-year contract to purchase gas from the plant is void.

Several proposals failed to advance, including an effort to speed implementation of a deal requiring Amazon.com to start collecting sales taxes for online purchases in July instead of next year as previously approved. And efforts to add table games at Indiana's two horse tracks and allow riverboat casinos to move on land both appeared headed for defeat in the Senate.

Republican Sen. Phil Boots of Crawfordsville had sought those provisions and said Friday he was disappointed he couldn't get an agreement from House Republicans who regarded them as an expansion of gambling.

The 2013 session was largely devoid of the strife that has marked legislators' work the last two years, when clashes over right-to-work legislation sparked Democratic walkouts.

Pence thanked lawmakers as the session adjourned just before 1:30 a.m.

"I am grateful for the efforts of every member who made this one of the most civil and substantive sessions of our state Legislature in recent memory," he said in a statement.